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	England and Wales High Court (King's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (King's Bench Division) Decisions >> Crabb & Ors v TUI Airways Ltd [2024] EWHC 3581 (KB) (08 November 2024) URL: http://www.bailii.org/ew/cases/EWHC/KB/2024/3581.html Cite as: [2024] EWHC 3581 (KB)

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IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL (Remote hearing by Microsoft Teams on Friday 8th November )

HHJ Graham Wood KC :

Introduction

1. It is now necessary to deal with the consequential orders which follow from the judgment recently handed down in this matter, after a ten day hearing in July of this year. There is limited agreement as to the terms of those orders, and I am asked to resolve the outstanding issues. I held a short hearing by Microsoft Teams on Friday of last week (8^th November). Because of the lack of time, and the need for reflection, I reserved my judgment.

Permission to appeal

2. I refused permission to appeal and gave reasons on an ex tempore basis. I set out those reasons within this judgment for the sake of completeness
3. The application for permission to appeal is incorporated in a document provided by counsel for the Claimants and deals with two aspects of my judgment. First, the finding that the Claimants' entitlement to PHI benefits ceased at the age of 65, and second, that clause 5.1, despite being incorporated into the individual contracts of employment, did not prevent a variation of PHI benefits by collectively bargained agreement between TUI and BAPLA.
4. Of course when dealing with the question of permission it is unnecessary, and in fact would be disproportionate and inappropriate, for the court to revisit in detail its findings, especially where there is a complex matrix of fact and law involved, as there is here. In the circumstances I propose to address relatively briefly the two separate issues, and the bases on which Ms Mayhew KC contends that there is a real prospect of success on any appeal.
5. First, in relation to the state pension age, which is higher than the retirement age for the Claimant pilots, the argument is derived from the explicit wording of clauses 2.1 and 3.1 which it is said is inconsistent with the construction of those clauses in my judgment, and the conclusions which I arrived at as to the intention of the parties, particularly the Defendant, as to how these benefits were to be paid. It is also said that I provided insufficient analysis of the aptness of the term relating to the state pension age for incorporation.
6. I respectfully disagree. As I made clear in my judgment there were a number of other factors apart from a construction of the wording of the clauses which were relevant, including the potentially incongruous result of an incapacitated pilot receiving substantially more than he would have been able to receive if he had remained able-bodied, and had secured an alternative role after the contractual retirement age as a pilot. I do not believe that there was an inadequate analysis or that this potential challenge has any real prospect of success. If I am wrong in that assessment, that is a matter for the appeal court.
7. Second, in relation to the effect of clause 5.1, it is quite right that in my judgment I identified the difficulty of contractual interpretation of a potentially conflicting provision and the relative lack of any precedent for the situation as to whether or not the clause carved out the PHI entitlement from collective bargaining. Whilst I acknowledged that the arguments advanced by the Claimants, as well as the Defendant were compelling, I do not accept that there was any flaw in my approach either procedurally, legally or by way of analysis. My judgment was lengthy, more lengthy in fact that I would have preferred, but I dealt extensively with the historical treatment of in-claim pilots and the collective bargaining process.
8. I bear in mind the test for an appeal based upon a real prospect of success. Further, when considering permission the court should not shut out the option of an appeal where there may be a novel and unresolved point of law on the basis of some other compelling reason. However, as in the case of the state pension age point, it seems to me that if an appeal route is to be pursued, this is a matter which should be sanctioned by the Court of Appeal on the renewal by the Claimants of their application for permission.
9. Accordingly permission to appeal is refused.

Other matters

10. In relation to the balance of the consequential orders, there were five areas of dispute, principally in relation to the appropriate costs order. These were summarised by Mr Edge, junior counsel for the Defendant, in his submissions as follows:

(a) the stay of both the detailed assessment of costs and the payment on account of such costs by the unsuccessful Claimants of almost £850,000;

(b) the incidence of interest to be paid in respect of those costs, that is the percentage over the base rate and the date from which interest on costs should begin to run;

(c) whether there should be an issue-based costs order to reflect the partial success of the Claimants on some issues;

(d) the percentage amount of the payment on account of costs that is awarded to reflect the significant reductions which may be made on any detailed assessment of costs if there is an issue-based costs order (the Claimants contending for up to 50%)

(e) whether the overall award of costs should be reduced by a flat rate of 1/8 to reflect the fact that a proportion of costs will be represented by defending the claim brought by Mr Sherpa, the second Claimant, whose case was resolved by the acceptance of a Part 36 offer.

11. During the course of the remote hearing I made my provisional view in relation to issues (b) and (e) known to the parties. This was to the effect that the court was being asked to address matters which were more appropriately dealt with by an experienced costs master on the detailed assessment. Counsel were able to take instructions and a measure of agreement was achieved. Thus the interest in relation to costs (b) will be a matter for the consideration of the costs judge whenever that detailed assessment takes place. Further, it was agreed that whilst the Defendant reserved its position in respect of a challenge to the deduction of 1/8 in respect of the costs relating to Mr Sherpa's claim (e), in the interests of expediency and proportionality, an appropriate deduction or allowance could be made when considering the overall percentage on account without the need for a detailed analysis at this stage. This clearly makes sense, because the work attributable to Mr Sherpa can be properly considered when the costs pleadings, including the points of dispute, are available.
12. Thus the remaining issues concern the overall award of costs (i.e. whether there should be any or all adjustment to reflect partial success) the amount of any payment on account of costs (in this respect issues (c) and (d) are clearly linked) and the stay pending resolution of the appeal process.

Submissions

13. I can deal with the respective submissions fairly briefly. On behalf of the Claimants, Ms Mayhew KC, who does not address the issue-based costs aspect in her skeleton argument for this hearing, acknowledges that a percentage reduction in the costs awarded to the successful party where the success has been partial is probably more appropriate than reserving to any detailed assessment the costs relating to each issue, where the costs Judge will have little appreciation of those issues having not heard the evidence or arguments at the trial. She submits that a substantial issue in this case related to the incorporation of the handbook paragraphs and the guidance as terms of the contract relating to PHI benefits. This required a historic understanding of the way in which the benefit was dealt with, which in turn led to extensive disclosure and cross examination, all of which would have been unnecessary if the Defendant had accepted that the terms of the benefit were contained within the handbook, instead of arguing that the handbook and the associated guidance were provided to pilots merely as an explanation as to how the benefit would be processed, with no contractual implications involved. She contends for 25% by way of a percentage reduction in the overall costs award.
14. In respect of the payment on account of costs, in addition to contending for a 1/8 reduction prior to detailed assessment to reflect the Sherpa element (acknowledging that the Defendants are entitled to have this revisited at the costs assessment stage) her primary submission is that the payment on account of costs should be no more than 50% of a reduced budgeted total (£729,613.86) to reflect the potential for an issue-based approach which would carry with it a degree of uncertainty. However, she now appears to accept that a percentage reduction for partial success is the more appropriate way of dealing with the overall award, and that an issue-based determination further down the line is unlikely. Otherwise, she accepts that 70% of incurred costs 90% of budgeted costs is an accepted approach.
15. In relation to the stay of both the detailed assessment and the payment on account of any costs (i.e. the enforcement of the same) Ms Mayhew makes two points. First, she relies upon the evidence adduced from Mr Rawlinson in respect of the tax position, which affects four of the Claimants. If they are required to make an immediate payment, this, she says, will cause irredeemable harm to those Claimants which could not be reversed were the appeal to be successful. She points to the fact that the detailed assessment process is likely to be highly complex and costly, and if commenced immediately will cause further harm, and has the potential to stifle any appeal by all the Claimants. As the Defendant continues to pay most of these Claimants PHI benefit because they remain in their employment, there would be little prejudice by imposing the stay pending an appeal. The Defendant on the other hand is a substantial international organisation which would not suffer financially by any delay in the payment of costs.
16. On behalf of the Defendant, Mr Edge, who made the submissions in relation to these matters, addressed the partial success argument by referring the court to the agreed issues which were provided at the outset of the trial, and which were incorporated into my judgment, amounting to some 23 separate matters which fell to be decided. The only matters upon which of the Claimants were successful, he contended, were the contractual status of the PHI Handbook and to a lesser extent the linked claim clause, but insofar as the latter had never been realistically challenged and had not risen as an issue between the parties it was very much on the sidelines of the evidence and the argument. In other words, there was no other way of looking at the overall determination of the court than as a resounding defeat for the Claimants. If the court was not persuaded and sought to reflect in the award a minor degree of success for the Claimants this should be no more than 4 to 5%.
17. In respect of a payment on account of costs, Mr Edge relied upon the skeleton argument provided by himself and Mr Williams KC which dealt with the conventional and now almost universally followed approach, where costs had been budgeted, for an order in the region of 90%, with 70% of incurred costs on an evaluation of the likely costs award which would be made. He does not accept that there should be a reduction for up to 50%, on the basis that an issue-based costs order is not likely to be made. This court can set the percentage for the overall recovery which will then be reflected in the payment on account.
18. On the issue of a stay, it was not accepted that the detailed assessment would be anywhere near as complicated as contended for by the Claimants, significantly because most of the costs were budgeted. He suggested that some 2 to 3 days was the likely listing. This would not have a stifling effect on any appeal process, and the matter should be allowed to proceed to a detailed assessment. He referred the court to Otkritie International Investment Management Limited v Urumov [2014] EWHC 755 (Comm), where Eder J considered the discretion of the court on the issue of a stay, and the guidance which had been given by previous authorities. This included the questions to be asked by the court when carrying out a balancing exercise to consider the respective injustice to either party. At paragraph 22 (iv) the judge referred to Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065 and the judgment of Clarke LJ explaining the approach to be taken when an appeal is being pursued:

"iv) Fourth, the sorts of questions to be asked when undertaking the "balancing exercise" are set out in Hammond Suddard Solicitors …………at §22, per Clarke LJ (emphasis supplied):

"By CPR rule 52.7, unless the appeal court or the lower court orders otherwise, an appeal does not operate as a stay of execution of the orders of the lower court. It follows that the court has a discretion whether or not to grant a stay. Whether the court should exercise its discretion to grant a stay will depend upon all the circumstances of the case, but the essential question is whether there is a risk of injustice to one or other or both parties if it grants or refuses a stay. In particular, if a stay is refused what are the risks of the appeal being stifled? If a stay is granted and the appeal fails, what are the risks that the respondent will be unable to enforce the judgment? On the other hand, if a stay is refused and the appeal succeeds, and the judgment is enforced in the meantime, what are the risks of the appellant being able to recover any monies paid from the respondent?"

19. Relying further on Hammond Suddards and the judgment of Clarke LJ, Mr Edge made reference to paragraph 20 to support his submission that mere assertion of a stifling of the appeal was insufficient and that evidence should be compelling.

"20. Before it could properly grant a stay, the court needs to have a full understanding of the true state of the company's affairs. Simple assertion, particularly if it is scarcely consistent with previous assertions, is not enough. Thus, in the instant case, we would have expected the appellant to produce accounts showing precisely what its trading and financial position is and how it has changed since 1998 in order to evaluate the risks of allowing enforcement to proceed in the ordinary way."

20. This is the case, he submits, where the Claimants have simply failed to provide a cogent reason why the court should exercise its discretion.

Determination

Award of costs

21. It is appropriate to deal first of all with the award of costs, i.e. to consider whether or not there should be any reduction to reflect a degree of success on the part of the Claimants in relation to some of the issues.
22. The starting point, of course, is CPR 44.2 (4), which expands on the court's general discretion in relation to costs:

"(2) If the court decides to make an order about costs –

(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

(b) the court may make a different order…."

23. And the further qualification:

"(4) In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

(a) ……..;

(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful;"

24. Whilst there is no doubt that the court has the power to direct that a detailed assessment is dealt with on the basis of an issues based order, it appears to be common ground that unless there is a clear identification of the extent of any costs that are attributable to issues, and easily divisible, this is an inappropriate burden to foist upon a costs judge, and that a far better approach is for the trial judge to determine whether or not there has been partial success, and to reflect that in a percentage award.
25. It seems to me that whilst the Defendant's success in defeating the central claim that the Claimants were excluded from the collectively bargained changes to their the PHI benefit from the age of 60 has been substantial, this has always been a multi-issue case of some complexity as exemplified by the fact that the court was called upon to determine a number of issues. It is not sufficient, in my judgment, to regard this as a point scoring exercise, where it might be suggested that out of that list there was an overwhelming score in favour of the Defendant. The court should take a step back and consider the extent to which the evidence, and argument, as well as the disclosure and preparation process was affected by the only issue upon which the Claimants were successful, namely the incorporation of the handbook contents as contractual terms. In my judgment, furthermore, it is necessary for the court to avoid speculating as to what might have happened had a particular issue not been live, so to speak; parties should not be deterred from challenging specific aspects of the evidence or making points which are not insubstantial, for fear of significant costs consequences despite the strength of the balance of the case.
26. Of course I have had the opportunity to delve deeply into this case and to consider the evidence in some detail. I accept the Claimants' contention that a significant part of the evidence related to the historic workings of PHI benefit over a number of years, and that witness testimony and cross-examination meant that the incorporation aspect was not a trifling issue. However, as with all the issues which were summarised, there was a considerable overlap, and it is not easy to conclude how the case might have been managed if the Defendant had accepted that the contractual terms were drawn from the handbook.
27. In my judgment, taking all these matters into consideration, there should be a modest reduction in relation to the overall award. The Defendant has achieved substantial but not complete success. Unless my determination is appealed (anticipating a potential cross-appeal by the Defendant) the finding which is not in their favour remains. It seems to me that the appropriate percentage reduction does not fall as low as the figure suggested by Mr Edge, but is significantly less than that contended for by Ms Mayhew KC. I arrive at a figure of 90% of the Defendant's costs to be subject to a detailed assessment if not agreed to reflect the resolution of the issues in this case.

Payment on account

28. I have no doubt that a payment on account is appropriate, and there seems to be little challenge to the 90/70 approach to reflect the budgeted and incurred costs, now that the "issue based" costs order path will not be pursued for the detailed assessment. There is an issue as to the starting point because Ms Mayhew challenges the inclusion of £17,360.68, being the costs incurred in preparing the budget. She also contends for a 1/8 reduction to reflect the "Sherpa" element.
29. However, on a reading of CPR 3.15 (5) there is an entitlement to the recovery of these costs provided they do not exceed a combined total of 2% of the total of incurred and budgeted costs. The figure contended for does not appear to do that.
30. There will inevitably be a degree of "broadbrush" when a payment on account of costs is assessed by the determining court which does not have the costs experience of a specialist costs master or judge. However it is possible to arrive at a reasonably accurate figure for the purposes of calculation from the interim payment schedule at page 701 of the consequential hearings bundle. The total budgeted and incurred costs subject to the percentages and including the budget preparation costs would appear to be £843,230 (rounded off). However, from this figure it is appropriate to apply a further deduction of 10% for the partial success assessment and a deduction of 1/8 (which is provisional and clearly without prejudicing the arguments which the Defendant will advance at the detailed assessment).
31. Therefore the payment on account should be worked out as follows:

£843,230 x 90% = £758,907

Further reduced to 87.5% (7/8) = £664,044.

The amount of any payment on account required from each of the remaining seven Claimants is therefore £94,863.

Should there be a stay?

32. As far as the stay is concerned, it is not in dispute that this is a matter within the discretion of the court, although there is a high threshold for the paying party, effectively the party that has lost the main action and that is required to pay costs on account to cross, if a stay is to be granted. There is no doubt that unless it can be overturned on appeal, my decision carries with it significant financial consequences for all these Claimants. The risks of costly litigation are always huge, and it almost goes without saying that the broadest shoulders with the greatest resources suffer the least harm when litigation is lost. In particular, evidence has been provided in this case that four of the Claimants will suffer particularly if there is a requirement to make a payment on account in the short term, because of the tax consequences. These are explained in the statement of Mr Rawlinson, and I accept that this genuinely set out the position. The Defendant's submission that mere assertion is insufficient and that the court should normally expect to see something concrete if a stay is to be granted is a valid one but I do not regard this evidence as lacking in substance, as appears to be suggested. It is indicated, and I accept, that the financial penalty of an immediate payment of such substantial costs on account, and progressing to an early detailed assessment has the potential to stifle some of these Claimants from pursuing an appeal.
33. However there is a further factor to be taken into consideration. This is derived from the Otkritie case referred to by Mr Edge, and paragraph 22 of the judgment of Eder J:

"v). Finally, the normal rule is for no stay to be granted, but where the justice of that approach is in doubt, the answer may depend on the perceived strength of the appeal: Leicester Circuits Ltd v Coates Brothers plc [2002] EWCA Civ 474 at §13, per Potter LJ."

34. As I refused permission to appeal, it follows that I do not identify any real prospect of success or any arguable point of law, although an appeal court may disagree with my assessment. In the circumstances, it would be possible that were I to refuse a stay of execution in relation to the costs orders made on account, this is a matter which could potentially be reviewed/renewed before the Court of Appeal. However, insofar as I consider the "justice of the normal approach to be in doubt" a fair way of dealing with this situation would be for me to grant a limited stay up to the point of the determination of permission to appeal either by a single Lord Justice of appeal on the papers, on an oral renewal. On this basis the appeal judge can consider the justice of the stay in the context of the merits of the appeal. Clearly if the appeal is granted permission, the Claimants will have a compelling case for the renewal of the stay. Ultimately if permission is refused the stay will fall away, and both the payments on account and the detailed assessment process can be pursued.

Conclusion

35. It seems to me that this covers all the consequential matters which were outstanding, and not resolved by agreement in the remote hearing. I invite the parties to draw up the appropriate order. If any further clarification is required, or I have misunderstood any aspect in this judgment, further brief written submissions can be provided.